If only the decision of the Apex Court the Supreme Court in (Air Frieght Ltd. V. State of Karnataka and others) reported in 1999(4) LLN 395 especially the following passage had been taken note before issue of Circular No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011of Mr K.C. Pandey Addl. Central P.F.Commissioner(Compliance) Employees Provident Fund Organization (Ministry of Labour & Employment, Govt. of India), Head Office, Bhavrshya Yidhr Bhawan, 14, Bhikaiji Cama Place. New Delhi - 110 066 prohibiting splitting of Minimum Wages for the purpose of PF contribution the multiplicity of legal proceedings in different High Courts would not have arisen:
"... it is one pay package. Neither the scheme nor any provisions of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same. Hence, in cases where employer is paying total sum which is higher than the minimum rates of wages fixed under the Act including the cost of living index (variable dearness allowance), he is not required to pay variable dearness allowance separately. However, that higher wages should be calculated as defined in Section 2(h) of the Act. Section 2(h) specifically provides that the value of the following items are not required to be computed for finding out whether employer pays minimum wages as prescribed under the Act: (i) the value of any house, accommodation, supply of light, water, medical care, or any other amenity or any service excluded by general or special order of the appropriate Government;
(ii) any pension fund or provident fund or under any scheme of social insurance;
(iii) any travelling allowance or the value of any travelling concession;
(iv) any sum paid to any person employed to defray special expenses entailed on him by the nature of his employment; or
(v) any gratuities payable on discharge.
But while deciding the question of payment of minimum wages, the Competent Authority is not required to bifurcate each component of the costs of each item taken into consideration for fixing minimum wages, as lump sum amount is determined for providing adequate remuneration to the workman so that he can sustain and maintain himself and his family and also preserve his efficiency as a worker. Dearness allowance is part and parcel of cost of necessities. In cases where the minimum rates of wages is linked up with variable dearness allowance, it would not mean that it is a separate component which is required to be paid separately where the employer pays a total pay package which is more than the prescribed minimum rate of wages. In the result, it is held that:
(1) The appellant-company would be covered by the expression "shops" and/or "commercial establishment" as it is carrying out various systematic commercial activities with profit motive and also it sells services on a retail basis.
(2) The notification issued under the Act prescribing minimum wages, applies to all kinds of shops and commercial establishments "big or small " and that payment of more than the prescribed minimum rates of wages is not relevant for deciding its applicability. It cannot be stated that as they are paying more than the prescribed minimum wages, the Act or notification would not be applicable. For determining whether they are paying minimum rates of wages or not, the amount paid for the value of items which are excluded under Section 2(h) of the Act is not to be taken into consideration. (3) Minimum rates of wages fixed under the Act is remuneration payable to the worker as one package of fixed amount. In cases where minimum wage is linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component of the minimum wages but as part and parcel of the process of computing the rates of minimum wages which is to be determined after taking into consideration the cost of various necessities. In this view of the matter, the order passed by the High Court holding that the State Government has fixed two separate categories of minimum rates of wages to be paid to the employees one basic and the other other allowance, that is, dearness allowance, is erroneous and is set aside.
At any rate the Circular No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011of Mr K.C. Pandey Addl. Central P.F.Commissioner(Compliance) Employees Provident Fund Organization (Ministry of Labour & Employment, Govt. of India), Head Office, Bhavrshya Yidhr Bhawan, 14, Bhikaiji Cama Place. New Delhi - 110 066 prohibiting splitting of Minimum Wages for the purpose of PF contribution cannot override the decision of the Apex Court.
Under Article 141 of the Constitution of India the Law declared by the Supreme Court is binding on all Courts and Tribunals.If any decision of any Inferior Court or Tribunal is contrary to the Law laid down by the Apex Court in Air Frieght Ltd. V. State of Karnataka and others reported in 1999(4) LLN 395 it is not a binding precedent and definitely the EPF Department cannot issue any Circular in violation of Law laid down by the Apex Court in Air Freight Ltd. V. State of Karnataka and others reported in 1999(4) LLN 395.
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